Tel Aviv and Wall Street stocks drop sharply as the shekel weakens

Shares fell sharply on both the Tel Aviv Stock Exchange and Wall Street, and the shekel lost ground against the US dollar, according to N12 correspondent Yuval Sadeh. In the same report, N12 said the Tel Aviv 125 index, the exchange's broad benchmark, had wiped out every gain it had made since the beginning of the year.

Ynet's news alerts service also reported sharp declines in Tel Aviv and New York, and connected them to what it called the "blue wave" in the United States. Neither outlet gave percentage figures for the falls or an exchange rate for the shekel in its initial alert.

What the TA-125 measures

The Tel Aviv 125, often written TA-125, tracks the 125 largest companies by market value listed on the Tel Aviv Stock Exchange, Israel's only stock exchange. It is the index most commonly cited as a gauge of the overall Israeli equity market. When a report says the TA-125 has erased its gains since the start of the year, it means the index has fallen back to roughly where it stood when the year began, so investors who bought at that point are no longer ahead.

Why Wall Street matters in Tel Aviv

Israeli markets are closely tied to those in the United States. Many large Israeli companies, particularly in technology and pharmaceuticals, are listed in New York as well as in Tel Aviv, and foreign institutional investors move money between the two markets. Sharp moves on Wall Street frequently show up on the Tel Aviv exchange during the same trading session, which is consistent with both outlets reporting declines in the two places together.

The shekel and the dollar

The new Israeli shekel is Israel's currency. A weaker shekel against the dollar means it takes more shekels to buy one dollar. For Israeli households this tends to raise the cost of imported goods and of travel abroad; for exporters, whose revenue is often earned in dollars, it can have the opposite effect. For readers abroad, including those planning to move to Israel or sending money there, a weaker shekel means foreign currency converts into more shekels. N12 did not say how far the currency moved.

The "blue wave" reference

Ynet tied the market falls to a "blue wave" in the United States. In American political usage, the phrase refers to strong electoral gains by the Democratic Party, whose associated colour is blue. Ynet's alert did not explain how it saw the connection between the political outcome and the sell-off, and N12's report did not mention a cause at all. The two reports therefore agree on the market moves but only one of them offers an explanation for them.

What the reports do not say

Neither alert gave the size of the falls on either exchange, the closing level of the TA-125, or the shekel's rate against the dollar. Ynet's explanation that the declines followed the US "blue wave" is its own attribution, and N12 did not offer one. No comment from the Bank of Israel, the Finance Ministry or the Tel Aviv Stock Exchange has been reported.